A songwriter who owns the first private airline to run flights in Vietnam has been prohibited from leaving the country because his beleaguered company owes more than US$1.3 million to a local bank.
If Indochina Airlines cannot pay its debt to Asia Commercial Bank (ACB), composer Ha Dung, whose full name is Ha Hung Dung, will be required to make the payment personally as he is the company's general director.
These decisions were made by a Ho Chi Minh City court after ACB filed a lawsuit suing the airline company, the Tuoi Tre (Youth) newspaper reported Thursday (November 3) without mentioning the specific date of what it called "recent" court happenings.
The court decided that Indochina Airlines must pay its debt of $1.19 million plus interest ($1.3 million in total) by July 27, 2012. Dung previously signed an agreement that he would pay the debt personally if his company could not.
According to the verdict, Indochina Airlines and ACB singed a contract to open a letter of credit.
Under request by Indochina Airlines, ACB paid $1.19 million to Komercni Banka A.S in the Czech Republic on behalf of the airline on January 12 last year.
The bank debited the amount to Indochina Airlines' account by the due date of August 12 last year with a monthly interest rate of 6.5 percent for payments made by the due date and 9.7 percent for late payments.
However, the airlines didn't pay the bank despite being notified several times, the court heard.
At the trial, an Indochina Airlines representative admitted to the debt but said the company is facing many financial difficulties and has yet to identify when it would be able to make the payment.
Ha Dung, a songwriter and general director of Indochina Airlines
A representative of Ha Dung admitted to signing a certificate of credit guaranteeing payment of the amount in case the company is unable to pay.
However, the court rejected a request by ACB to auction a house on Ba Huyen Thanh Quan Street that Dung mortgaged for the debt, because this agreement was not approved by a notary public service as required.
Indochina Airlines was set up in May 2008 and launched its first flight six months later, with two Boeing 737-800 airplanes wet-leased by Travel Service in Czech Republic.
However, the airlines halted all flights a year later due to financial difficulties. Since then, many of its agents and partners have requested payment and many have asked that the airlines' license be revoked.
In November 2009, the company's last airplane left Vietnam and two months later, the Civil Aviation Authority of Vietnam (CAAV) revoked the company's right to transport passengers in Vietnam, saying it failed to show required capital.
In January this year, Dung asked to delay his company's license revocation until December, following requests by the airline's co-founders. The company also asked the Prime Minister to offer loans for further investment.
CAAV said it supported the idea but required the company to submit a detailed plan of operation and financing, especially plans to pay its debtors as well as procure an air operator's certificate (AOC).
Indochina Airlines has yet to produce an AOC, thus license revocation is totally possible, the aviation agency said.